Going beyond minimum wage

A national wages council will be necessary to help redress income imbalance.

MINIMUM wages are but the first step towards a more equitable remuneration system in the country and should form part of a grander scheme to ensure that workers get a greater share of the total income produced.

With income disparity actually increasing in the country, one cannot depend on employers to reduce this voluntarily.

Employers’ organisations, which are often far better funded and manned than unions, will work for the interests of employers.

Almost by instinct, employers’ organisations such as the Malaysian Employers Federation or MEF oppose anything which will improve workers’ benefits because they feel that employers will lose out as a consequence. But that does not necessarily have to be the case.

An enlightened relationship where both the worker and the employer have their interests more aligned and both benefit from productivity increases can help.

The only way this can be done is to ensure that workers get back some of the benefits from increased productivity and fortuitous circumstances.

Unfortunately, that has not been the case, and to this day most Malaysian organisations remain terribly enlightened. The best workers look to foreign multinationals for better terms and benefits.

If there is one group of workers who have seen their fates steadily eroded despite the rising fortunes of their employers, it must have been the largely Indian plantation workers.

Independence never gave them their due because of a set of circumstances that steadily made their condition worse.

Neither the National Union of Plantation Workers nor the MIC could get them sufficient benefits to be drawn into the mainstream of development.

Both could not put up enough of a resistance to the Government and plantations to stop the deluge of foreign workers into the sector and many Indians were forced out of their green ghettoes in the estates to become part of urban ghettoes instead, worsening the social problems of the community.

Employers’ organisations openly declared way back in 1985 that plantations would grind to a halt if there were a clampdown on illegal labour. Now, 27 years later, we are still trying to tackle the illegal immigrant problem with no success in sight.

With few exceptions, the plantation workers did not benefit from the uptrend in commodity prices while their livelihood was further put in jeopardy when already low wages were depressed by an influx of cheap Indonesian labour, much of it illegal.

Not surprisingly, the employers’ organisations led by the MEF have led the campaign against worker benefits such as a minimum wage, five-day week, higher maternity leave, etc. The relationship between them and the unions have been largely adversarial.

Only recently have employers given up their resistance towards minimum wage, and the Government is expected to announce one soon.

Even so, some of them are still fighting in retreat with claims that small businesses could go out of business if a minimum wage, speculated at between RM800 and RM900 a month, is implemented.

For those of us more fortunate, it is hard to imagine how anyone can take home a salary of RM800 and manage with rental, household expenses, transport and so on. Even that kind of minimum wage puts workers on the edge of poverty or into it.

While employers accuse the unions of not understanding business and the need to tie wages to productivity increases, there are indications that improvement in business success is not reflected by a proportionate increase in workers’ wages.

Any fair system of salaries should establish a minimum or subsistence wage. Beyond that, a scheme is sorely needed to establish and agree on wage increases for productivity increases.

On top of that, one needs to have a variable component of wages which will depend on the actual performance of the company. If the company does well, its employees should be rewarded via bonuses, preferably according to a specified formula.

Only if workers share the company’s good times can they be reasonably expected to tighten their belts when times are bad for the company.

Better worker-employer relationship has to be premised on a common intent on the part of both worker and employer to raise productivity and to share the results.

In practice, that’s very difficult to achieve. For casual labour, the situation is considerably complicated by an influx of cheap labour, much of it illegal. Whole sections of the economy such as plantations, restaurants, shops, services and construction have come to depend on them.

Because of the availability of cheap labour, employers have had little reason to increase productivity, relying instead on paying many workers cheaply to get the job done instead of reducing numbers and committing to automation and training to increase productivity.

That has to be changed. If we are to become developed and have a high income, the only way that can be done is to give labour its due and pay it a fair, decent, living compensation.

Then employers will figure out ways to make labour more productive and reward them accordingly.

For this to proceed smoothly, effectively and consensually, em-ployers and workers have to come together more closely under the umbrella of an independent national wages council to determine fair wages which will be reasonably tied to productivity and profitability.

Yes, we need to establish minimum standards, of which a minimum wage is but one, which recognise the basic rights of workers to a decent wage.

But it is even more important to understand that everyone will gain more by aligning their common interests together.

We need to move quickly to come up with better worker-employer accords that recognise the legitimate rights and aspirations of both sides and lead to more equitable income distribution between the two.